The U.S. Travel Sector in Crisis: Geopolitical Shifts and the Rise of Global Rivals

The U.S. travel sector is grappling with a historic downturn in 2025, driven by a confluence of geopolitical tensions, economic pressures, and policy shifts. International arrivals have plummeted by 8.2% year-to-date, with key markets like Canada (-25%) and Germany (-10%) experiencing sharp declines [1]. The Trump administration’s “visa integrity fee,” tariffs on Canadian and Mexican exports, and a perceived unwelcoming environment for international visitors have collectively eroded confidence in the U.S. as a top destination [2]. This crisis has triggered a $12.5 billion loss in international visitor spending, according to the World Travel & Tourism Council (WTTC), and threatens to undermine the sector’s $2.6 trillion contribution to the U.S. economy [3].

Geopolitical and Economic Catalysts

The decline is not merely cyclical but structural. A strengthening U.S. dollar, inflation, and retaliatory tariffs from trade partners have compounded the impact of restrictive policies. For instance, Canada’s retaliatory measures against U.S. tariffs have slashed cross-border tourism, particularly in cities like Buffalo and Las Vegas [4]. Meanwhile, a new $250 visa fee has raised total entry costs to $442, deterring budget-conscious travelers [5]. These factors have created a vacuum in global tourism, which rival economies are swiftly filling.

Global Rivals Rising: Strategic Gains in Tourism-Dependent Economies

As the U.S. falters, countries like Colombia, Thailand, and China are capitalizing on the shift. Colombia, for example, welcomed 6.2 million international tourists in 2024—a 11% annual increase—and aims to surpass 10 million in 2025 [6]. The country’s low travel costs, government-led campaigns (e.g., “For everything you want to experience, the answer is Colombia”), and focus on eco-tourism have positioned it as a prime alternative to the U.S. [7]. Similarly, Thailand’s tourism sector is rebounding, with 20.8 million international arrivals in 2025—84% of pre-pandemic levels—despite a strong baht challenging affordability [8].

China, meanwhile, has seen a 10.3% surge in tourism revenue compared to 2019, driven by outbound investment in Southeast Asia and Central Europe [9]. Outbound Chinese tourists are redirecting spending to destinations like Thailand and Hungary, where infrastructure investments and visa facilitation policies are attracting capital [10].

Investment Opportunities in Emerging Markets

The reallocation of capital to tourism-dependent economies is accelerating. In Colombia, hospitality real estate investments are booming, with boutique hotels and eco-resorts in Bogotá, Medellín, and Cartagena driving a 5.5% CAGR in the Latin American hotel market [11]. Thailand’s government is prioritizing sustainable urban infrastructure, including rooftop solar installations and energy-efficient retrofits, while the World Bank supports projects in cities like Phuket and Chiang Mai [12].

For investors, these markets offer dual advantages: high-growth tourism sectors and policy incentives. Colombia’s 50% average hotel occupancy rate in 2025 [13] and Thailand’s projected 7.5% CAGR in the Asia-Pacific hotel market [14] underscore their appeal. Additionally, alternative lodging formats (e.g., vacation rentals) are gaining traction, with tourist rental housing in Colombia expanding by 80% over two years [15].

Strategic Reallocation: A Path Forward

The U.S. travel crisis underscores a broader trend: global tourism is decentralizing. While the U.S. risks losing its competitive edge, countries with agile policies and infrastructure investments are reaping rewards. For capital allocators, the imperative is clear: prioritize destinations that align with shifting traveler preferences and geopolitical realities.

Source:

[1] Downturn in travel to the US may last beyond summer, [https://www.10news.com/life/travel/downturn-in-international-travel-to-the-us-may-last-beyond-summer-experts-warn]
[2] Trump Era Policies Drive Steep Drop In U S Tourism, [https://evrimagaci.org/gpt/trump-era-policies-drive-steep-drop-in-u-s-tourism-496604?srsltid=AfmBOoq2Iy3xpE8Y0y4Pc_wLE9CwGWAXt5ulv5X8KCiBQ8Zri1fmkhqF]
[3] U.S Economy Set To Lose $12.5BN In International ... [https://wttc.org/news/us-economy-set-to-lose-12-5bn-in-international-traveler-spend-this-year]
[4] South Dakota Joins Nevada, New York, Washington, Florida, California in Freezing Tourism as Inflation, Trump Tariff, and Canadian Tourists Vanish Crush US Travel Industry [https://www.travelandtourworld.com/news/article/south-dakota-joins-nevada-new-york-washington-florida-california-in-freezing-tourism-as-inflation-trump-tariff-and-canadian-tourists-vanish-crush-us-travel-industry/]
[5] How US Tourism Is Losing Ground in 2025 Amid Rising Costs and Stricter Visa Policies: Is There a Chance of a Comeback? [https://www.travelandtourworld.com/news/article/how-us-tourism-is-losing-ground-in-2025-amid-rising-costs-and-stricter-visa-policies-is-there-a-chance-of-a-comeback/]
[6] Colombia Tourism Figures 2024 - Perspectives 2025 [https://www.medellinadvisors.com/colombia-tourism-figures-2024-perspectives-2025/]
[7] 2025 Global Hotel Outlook, [https://www.cbre.com/insights/reports/2025-global-hotel-outlook]
[8] Thailand Eyes for Year-End Tourism Boost as the Foreign Visitors Monitor Thai Baht Trends [https://www.travelandtourworld.com/news/article/thailand-eyes-for-year-end-tourism-boost-as-the-foreign-visitors-monitor-thai-baht-trends/]
[9] China's 2025 Outbound Investment: Key Markets & Sector Trends [https://www.china-briefing.com/news/chinas-2025-outbound-investment-key-markets-sector-trends/]
[10] OECD Economic Outlook, Volume 2025 Issue 1 [https://www.oecd.org/en/publications/oecd-economic-outlook-volume-2025-issue-1_83363382-en.html]
[11] 2025 Global Hotel Outlook, [https://www.cbre.com/insights/reports/2025-global-hotel-outlook]
[12] Thailand Overview: Development news, research, data [https://www.worldbank.org/en/country/thailand/overview]
[13] 2025 Global Hotel Outlook, [https://www.cbre.com/insights/reports/2025-global-hotel-outlook]
[14] The Hotel Industry 2024 - 2025 in 10 Insights - Blog de Bismart, [https://blog.bismart.com/en/10-insights-hotel-industry]
[15] 2025 Global Hotel Outlook, [https://www.cbre.com/insights/reports/2025-global-hotel-outlook]